Import duty: what it is, who pays it and how the rate is set

Three inputs decide the duty

US duty rates live in the Harmonized Tariff Schedule (HTS). Every product falls under one line, and the line, the country the goods come from and their value together decide what you pay.

What the product is. Small differences in the product move it to a different line with a different rate. Plastic tableware shows how fine the split is: plastic plates and cups carry a general rate of 6.5%^[2], plastic trays 5.3%^[3], and other plastic tableware and kitchenware 3.4%^[4]. Most rates are a percentage of value, but some lines charge per unit as well: one price band of sports shoes with textile uppers (outside the narrower lines for textile soles) pays 90¢ a pair plus 20% of the value^[5].

Where the goods come from. Each line has three rate columns:

On top of the column rate, a separate chapter of the schedule adds duties for particular countries. Goods of China, for example, carry an extra 12.5%^[7] under a Section 301 action that imposes tariffs on all products of the investigated economy, with certain exemptions^[8]. That duty is charged on top of the general rate, not instead of it, and apart from listed exceptions goods under it are also subject to any additional duty provided for in subchapter III or IV of chapter 99^[9], so when you import from China the layers add up.

What the goods are worth. Duty is charged on the customs value, which for most orders is the price you paid the seller, leaving out the transportation, insurance, and related services incident to the international shipment^[10]. That is why an FOB price is the usual starting point, and why freight inside a CIF price has to come out before the rate is applied.

Who pays it, and when

• The importer of record owes it. Duty attaches on arrival of the importing vessel within a Customs port with the intent then and there to unlade^[1], and it is a personal debt due from the importer to the United States^[1]. It is also a lien upon the merchandise imported^[1], which can be enforced while the goods are in CBP's custody or control.
• It is paid as an estimate first. The entry summary is filed, with the estimated duties, within 10 working days after the time of entry^[11], unless it is filed with the entry itself.
• The final figure comes at liquidation. CBP liquidates the entry later. Unless CBP extends the period, an entry not liquidated within one year from the date of entry^[12] is treated as liquidated at the duty the importer declared, so the amount you deposit is not final until then.

When you buy from an overseas manufacturer on FOB or FCA terms, you are normally the importer of record, so the duty is yours to pay and is not part of the quoted unit price.

Duty is not the only charge at entry

Fees sit alongside duty and are worked out separately. One is the merchandise processing fee, charged at 0.3464%^[13] of the value on a formal entry, within a minimum and a maximum amount per entry. A fee is not a duty, so a free rate of duty does not by itself mean there are no fees to pay. The import duty and landed cost guide adds both to a full calculation.

Example: a per-pair rate at work

An order of 1,000 pairs of sports shoes with textile uppers, in the price band charged 90¢ a pair plus 20% of the value^[5], with a customs value of $9.00 a pair. This shows the general column only, before any additional duty for the country of origin.

Duty on a shoe order under a compound rate

Line	Amount
Customs value, 1,000 pairs at $9.00	$9,000
Per-pair part, 1,000 pairs at 90¢	$900
Value part, on $9,000	$1,800
Duty at the general rate	$2,700
Duty per pair	$2.70

Illustrative figures, not a quote. Real prices depend on the spec, quantity and factory.

A fixed charge per pair weighs more on a cheap shoe than on an expensive one, so on lines like this the effective rate falls as the unit value rises. Check how your line is charged before you set a target price.